The efficiency wage is
A) lower than the market-clearing wage, to penalize shirking.
B) higher than the market-clearing wage, to penalize shirking.
C) lower than the market-clearing wage, to allow managers the resources to monitor shirking.
D) higher than the market-clearing wage, to reward workers for informing on others who shirk.
E) lower than the market-clearing wage, because of shirking done by managers.
Question 2
Some popular reality television programs follow people who buy the contents of abandoned storage lockers at public auctions. In most cases, several storeage lockers are sold in sequence during a particular auction.
Occassionally, one of the buyers will purposefully bid much more than the expected value of a particular storage locker in order to intimidate the other bidders. What is a plausible explanation for these excessive bids? A) The buyer is trying to establish a reputation that may affect the outcome of later auctions.
B) The excessive bids may be rational if they occur during the last auction of the day.
C) The bidder is trying to establish a first-mover advantage, but only if they occur during the first auction of the day.
D) The excessive bids represent a form of tacit collusion among the buyers.
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